Cloud Technology: What It Means For Accountants

By Adam Centorrino, Managing Director and Centorrino Technologies

“Cloud” has become a buzzword over the past three years. The term is applied to any service which is generally known as a Hosted Service. No matter how you refer to it, the fact is, many organisations have been using some form of ‘cloud’ or hosted service for many years without even realising it.

For example, web and email hosting provides a hosted service. Traditionally, your organisation’s public facing website is hosted externally in someone’s datacentre to ensure that it has the required capacity and uptime.  Today however, there are numerous cloud technologies available including Web-based applications, Remote Desktop, Cloud Backup solutions and Hosted PABX or VOIP Services, to name a few.

Over the past 12 months, we’ve seen a large number of accounting and professional services companies transitioning their services to the Cloud. Here at CENTORRINO Technologies, we have experienced an increase of approximately 30% in the uptake of our Cloud Services by professional service organisations. Our current predictions see this trend continuing for the foreseeable future due to the increasing uptake in Cloud accounting software, such as Xero and MYOB Live Accounts.

So why are professional service organisations transitioning to the cloud? The answer lies in the comparison between having onsite infrastructure and pushing more services to the Cloud.  There are a large amount of benefits an organisation can experience by transitioning services to the Cloud. These benefits can vary from organisation to organisation but generally a similar set of advantages exist in most setups. These advantages are:

1. Reduction in CAPEX: Most Cloud Services operate on an OPEX model. The Cloud Service is usually a monthly subscription whereby you pay a set fee periodically for access to the cloud service.

2. Magnitudes of Scale: A major advantage of utilising a Cloud Provider is that you are able to take advantage of their size. Generally, you‘re able to scale up or down as your needs change without needing to purchase any additional hardware. Most Cloud providers utilise Enterprise or Datacentre grade infrastructure which typically delivers higher levels of reliability and provides more options than having your own hardware onsite – essentially, this gives you more bang for your buck. 

3. Cost: Due to the subscription model offered by cloud providers, the Cloud is usually fraction of the cost of traditional onsite hardware.

4. Price Reductions: I have yet to come across a Cloud Provider who puts up their pricing. Over the course of your engagement with the Cloud Provider, you will generally find that their pricing remains the same or, as in most cases, pricing drops over time due to the reducing cost of hardware. If you were to use of internal hardware, you’re stuck with it and can’t take advantage of any future price drops.

5. Headache-Free: By engaging with a Cloud Provider, you do not need to worry about the server infrastructure and backups. This is taken care of for you as part of your subscription, meaning you can get on with running your business and letting the cloud provider worry about the infrastructure.

6. Access Anytime from Anywhere: Due to the sheer design of most cloud technologies, you are able to access these services from any place at any time.

Cloud technologies are not for everyone. Like almost everything, there are also some limitations that are important to recognise and understand. For some organisations, these limitations are too great to overcome and become a roadblock in their plans to transition to the cloud. These are the organisations that most likely fall into the category of “cloud is not for you.” The most common limitations are:

• Poor Multimedia Experience: Generally, for most cloud based setups, the latency that exists between the end client terminal/workstation and the cloud server itself is greater than the latency experienced on a local network. When using service such as Citrix or Microsoft Remote Desktop Services, this latency can give the user a poor multimedia experience. For example, YouTube videos struggle to play seamlessly, Voice services like Skype are more difficult to use, and the screen refresh rate for graphics intensive applications such as games and CAD applications is generally too slow to provide a seamless experience.
• Connectivity: On a local network, you typically have a 1Gbps connection to the server itself meaning that the connectivity to the server is extremely fast. When utilising Cloud Technologies, you rely upon a WAN (Wide Area Network) link such as an Internet Connection to connect your workstation to the Cloud service. These WAN links are generally not as reliable as an internal Local Area Network and thus occasionally have issues – meaning your users are disconnected from the Cloud Service for the duration of the outage. Ensuring the WAN connection is a business grade, uncontended link can significantly reduce the risk of losing connectivity to your cloud service.

One of the most common questions we here at CENTORRINO Technologies get asked is whether utilising Cloud based services is any less secure than utilising onsite infrastructure. The response in almost all cases is no. Most organisations connect their local onsite infrastructure to the Internet, making the onsite server no less connected than a Cloud Server. The difference, however, is that most Cloud Providers have large Enterprise or DataCentre grade firewalls which sit in front of the cloud service, adding a layer of security. Not many Small to Medium size organisations can afford to purchase a firewall of this calibre to protect their onsite servers and thus render the organisation’s infrastructure less secure than a cloud service. When selecting any cloud provider, it’s critical to understand what security protection and disaster recovery practices they have in place to ensure that these satisfy your own risk tolerance levels (i.e. how much risk you are comfortable with).

Ultimately, Cloud technologies are not something that are going to disappear overnight – they’re here for the long haul. Regardless of your preference, it is critical to determine what the advantages and disadvantages are for utilising cloud services with your business. Only when you are comfortable in your knowledge of “the Cloud” should you consider transitioning.